Stefanomics

I’ve recently started reading Milton Friedman’s Free to Choose, a book that I’ve long wanted to read, but never got around to until now. Friedman has been a fascinating figure to me because he’s someone who was far ahead of his time in understanding the futility of the drug war, yet is also someone whose libertarianism is associated with fascist views. I’ve always wanted to know how much of what we think of Milton Friedman is based upon the things he actually advocated, how much is based on people’s misunderstandings of the things he actually advocated, and how much is based upon what’s happened in American society and our economy since he wrote it.

I’m only through the first 4 chapters, so I’m not quite ready to tackle that entire subject yet, but there were two things this week that compounded my thinking on this subject. First was the intense back and forth at Balloon Juice between E.D. Kain and John Cole. As someone who sits somewhere inbetween the liberal and libertarian poles of thinking, I’ve been incredibly impressed with Kain’s ability to balance the two. I’ve long believed that this is where the real debates need to happen, but that far too often libertarians fall back on overly simplified mantras rather than engaging on the merits. Kain didn’t do that, and in turn, some of the commenters (but not all) chose to fall back on overly simplified mantras about libertarians rather than engaging on the merits of the argument he made.

So. We’ll let city bureaucrats who have no experience creating jobs in the private sector pick and choose the entrepreneurs whom they feel can (1) do the best job of creating jobs in the private sector, or (2) be the most attractive recipients of patronage. That’s destined to turn out well.

Maybe instead of raising taxes on the private sector so inexperienced bureaucrats can destroy even more wealth in the private sector, we just let private enterprises use their own resources to make their own purchasing, investment and hiring decisions?

Nah.

This is a common sentiment among libertarians; that government “bureaucrats” are like a black hole for public funds meant to boost employment, and that in order to really boost employment, only someone from corporate America can be trusted with such a complex task. Reading through Free to Choose, it’s easy to pick out the passages that lead to this belief, but Sharkansky takes this to an absurd extreme that I’m not even sure Friedman would go along with.

On top of that, Sharkansky doesn’t even seem to understand what he’s arguing against. Here’s a section of the Times article he didn’t excerpt:

The plan didn’t include many new announcements. Much of the money involved is federal stimulus funds applied for under the previous administration. But it teams up the mayor with the business community after an uneasy eight months and puts on paper a collection of things the city can do even in a difficult economy.

George Allen, lobbyist for the Greater Seattle Chamber of Commerce, said the plan plays off the mayor’s strength — bringing together a diverse group of people and ideas — and will make a true difference in recovering local jobs.

The idea that McGinn isn’t working with the private sector on this is completely baseless. Not to mention that the largest chunk of the money is going to small businesses in the forms of loans and tax breaks, so that they can make their own choices about how to manage that money. You could potentially argue that one of the particular beneficiaries listed in the article is unworthy of assistance because the work they do isn’t going to benefit us in the long run, but Sharkansky is too lazy to do that. Instead, he just repeats a tired old stereotype about government bureaucrats and pretends he’s made some kind of argument. He hasn’t.

I don’t dispute that there are differences between public and private institutions. Each have their own strengths and weaknesses. But how bureaucratic an institution becomes has more to do with its size, rather than whether it exists to serve the public, serve shareholders, or serve itself. There are public institutions that are nimble and serve the public well, and there are private companies that are unbelievably bureaucratic (I’ve worked for several). The key to encouraging job growth tends to be about boosting small-scale entrepreneurship, which much of McGinn’s plan seems focused on. The real tragedy of Sharkansky’s brand of “glibertarianism” is that it often does the exact opposite of that, through giveaways to large scale private institutions that do little to create American jobs or move our economy forward. What I remain unclear about still is whether or not idiocy like this is the logical extension of Friedman’s philosophy, or if this is a bastardization that ignores a significant amount of nuance. At this point, I still think it’s the latter, but it’s a topic I’m hoping to explore in some upcoming posts.

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I’ve observed many people over the years who described themselves as “libertarians.” For many of them, if you cut through the bullshit they are just people who don’t want to pay taxes. They just like to call themselves “libertarian” because it gives them an aura of crediblity and legitimacy that “parasite,” “freeloader” or “leech” don’t quite carry. Glibertarians indeed!

you yourself sound like one of those people who pay very little(or none at all) in taxes, and expect others pay even more than they currently do, for services that you use.

I think most libertarians would tell you that they dont mind paying taxes for things that the govt should be doing – but not for wasteful pork bullshit or for things the govt has no business doing or being involved in in the first place.

but hey, lets sink few billion dollars more into things like light rail, that NOBODY rides.

Lee-
For the first time, voters trust Republicans on ALL 10 major issues. The number 1 issue is the economy. You try & minimize Stefan Sharkansky’s position. Most Americans clearly agree with Stefan.

Thursday, August 26, 2010
Voters now trust Republicans more than Democrats on all 10 of the important issues regularly tracked by Rasmussen Reports.
The GOP has consistently been trusted on most issues for months now, but in July they held the lead on only nine of the key issues.
Republicans lead Democrats 47% to 39% on the economy, which remains the most important issue to voters. Those numbers are nearly identical to those found in June. Republicans have held the advantage on the economy since May of last year. But for the first time in months, Republicans now hold a slight edge on the issues of government ethics and corruption, 40% to 38%. Voters have been mostly undecided for the past several months on which party to trust more on this issue, but Democrats have held small leads since February. Still, more than one-in-five voters (22%) are still not sure which party to trust more on ethics issues. Government ethics and corruption have been second only to the economy in terms of importance to voters over the past year.

Thanks to Maxine and Rangel for the boost on Ethics!
You got us right where you want us Lee!
Ahead on everything.

How many jobs has ImamObaMao created in his life?
ANSWER: ZERO!
So we have a pathetic amateur dicking around with people’s lives.
The Progressive’s had their chance and have blown it big-time.
America sees thru the Utopian Marxist Jive-talking y’all been doing.
You have failed and now you want to educate us on Economics 101??
Forget it.
You lost.
Get used to it.

Lee,
I admire you for being able to get thru Kain’s posts. I’ve given up on trying. Having read the opening remarks of his current walk back I stopped when he mentioned he had had a bit too much to drink.

Regarding Friedman he’s a bit hard to untangle. The man actually did difficult and good scholarly work in the field of economics. The problem with Friedman is the way in which he interjected his philosophy into the work. I think this intermixing of fantasy and math is what makes it hard for the dimmer bulbs to grasp.

Finally, I’d ask you and readers to compare the commentary of Friedman with that of Krugman. Krugman, like Friedman before him, does not try and hide his philosophical bent. The difference, IMHO, is that Krugman does not try to bolster his opinion recommending firing Cat Food Co-Chair Simpson with lots of hocus pocus economics. And when Krugman gets wonkish, he warns his readers.

Oh, Sharkansky’s post is so stupid as to beg the question whether the reason is ridiculous laziness or if he has sustained serious brain trauma.

Once more into the fray: Though it is idiotic to think otherwise, too many people assume that tax money is somehow magically spent into a disappearing invisible realm. It needs be noted that every single penny of tax generated revenue eventually makes it into the pockets of corporations. Every penny! Whether in direct contracting for the myriad amounts of material used (paper, cars, gasoline, computers, IT, building rents, power and utilities), or through paying people to do things, the money goes to the corporations. Government labor dollars go to people who spend it on gas (oil companies), food (massive conglomerates), utilities (what a morass they are), shelter (financial industry), health care (how big are those companies), and so forth. Unless it is somehow lost, each penny makes its way into the profit machines. To argue in support of cutting taxes only cuts services and people out of this loop. Seems to me to be better to have more people than fewer people served by the money.

Lee good work. I read “Free to Choose” years ago and still suggest it to others as a good starting point. A new book to read would be Jeffery Miron’s “Libertarianism from A to Z”. I gave my copy away before I got too far into it and I do disagree with him on a couple of points in the first few chapters but it reads like a good short explanation. He’s at Harvard and regularly writes for the print media. He also blogs regularly.

The Chicago Boys get dragged into the Chilean mess and how much blame they deserve will never be settled. There are however a number of areas where we should look at opening the marketplace and in doing so we should ask ourselves why the market was closed in the first place and who benefited. Housing, medical care and transportation are my three favorites along with occupational licensing which is the last of the Jim Crow Laws from my perspective.

One more point. The preamble to the Constitution uses the phrase to ensure justice as on of the responsibilities of the government. It is one the government has not done even halfway decently at over the years. Adequate liabilities laws to protect people are an important function of the government. Stealing is wrong no matter how you define it.

Progressives crack me up. Any half sane person can point out the manifold flaws in their juvenile world view, but they go on believing it anyway. It’s like talking to a 30 year old who believes in Santa.

re 17 Christine Romer, recently of Council of Economic Advisers, if I recall the agency correctly, and her husband, David, published a paper in which they suggested that based on the evidence one dollar in tax cuts resulted in a three dollar growth in the GDP. That’s the short version. I’m sure you can find the paper on the web.

Progressives crack me up. Any half sane person can point out the manifold flaws in their juvenile world view, but they go on believing it anyway. It’s like talking to a 30 year old who believes in Santa.

08/26/2010 at 5:46 pm

Crawling out of his sphincter to (WAIT…did he see his shadow???) take his turn as the Klownservative “whack-a-mole” du jour…”lostinhisownasshole” seems to give us ANOTHER example of Republican “sanity”. CORPORATIONS!!!! (the “my dick is bigger than your dick” school of foreign policy didn’t quite cut it, huh).

Let’s see…

The evil corporations have taken over the world!!!! Soon we’ll all be forced to give half our money to them, obey silly revenue generating laws made by them, and generally kowtow to them!!!

The stupid motherfucker was almost right for once…though he took it back in the next paragraph.

Evil corporations have taken over the world.

Fact.

And…there are less of them…evil corporations that is…’cause the big ‘uns have been gobbling up all the litler ‘uns in their path.

(See…BANKS/Media Outlets and Groups/Insurance Companies)

So…less competition, more evil profits…more corporate coffers currently stuffed to the gills with CASH…NO INVESTMENT IN MANUFACTURING (MORE tax cuts for the already rich anyone???)…NO INVESTMENT IN NEW JOBS (and here I thought the “private sector” just COULD NOT WAIT to put their fellow Americans to work)…it just goes on and on and on.

Maybe “lostinhisownasshole”, our dear correspondent can clean the shit off his fingers long enough to tell us why this corporate consolidation and lack of comtetition is good for the country (THIS ought to be good).

Furthermore, as incoming Chair of the Council of Economic Advisers Romer and her team published the projected multipliers by quarter of the stimulus plan for both expenditures and tax cuts in Appendix 1, and the predictions is this paper are consistent with Romer & Romer’s work of 2007 showing the highest quarterly multiplier for tax cuts to be 0.99 vs. 1.57 for government purchases (i.e. spending).

There has never been analysis which has shown tax cuts to be superior to spending in terms of a multiplier.
In fact, the argument for tax cut superiority over spending for spurring/stimulating macroeconomic growth has always been based upon an admittedly unmeasurable phenomenon of confidence (or not) in the future (i.e. it should therefore it does).

I know, and was speaking mainly tongue in cheek. But the hatred for profit making ventures endemic in liberal thinking really is dangerous to the economic prospects of the country. So is the mindless adoration of anything governmental.

What he really was saying is that we should filter dollars through a few expensive layers of government prior to reaching the corporate pockets. That is, before a dollar is spent on WIC at Safeway, we should spend 2 dollars getting it to the WIC recipient. How does this make any economic sense whatever?

What does the exact dollar amount wasted on government matter? I was stating a number at random to make a point. The point is that whatever the ‘redistribution’ costs, that money is always wasted. Rather than generate jobs (real ones, not government sinecures where productivity is a nasty word) or profit it is sucked into the maw of government.

See an economy has to produce something other than a lazy DSHS employee. It has to produce cars, or computers or airplanes to be viable. Every dollar taken to support our bloated government inhibits the creation of these real jobs.

Sorry, I forgot liberals have no mathematical ability. I assumed you knew that stores still charge the money for the product, no matter the cost to robbed taxpayers delivering the payment to the store. You’ve probably gotten so used to living on food stamps that you forgot someone pays for that food eventually.

the hatred for profit making ventures endemic in liberal thinking really is dangerous to the economic prospects of the country.

Um… Apple Computer’s doing pretty good, it’s run by liberals. Walk the halls over at Microsoft and you’ll find mostly liberals. Google? Liberals! Most of the non-profits helping out the poor, the disabled, the down trodden; (you know doing God’s work) they’re chocked full of liberals! I know I’ve been one of them for the last 15 years. Starbucks? Most of the upper ranks are center/left. Amazon? Liberals!

It’s the center/left that are driving what’s left of our economy forward. There’s no:

hatred for profit making ventures endemic in liberal thinking

What he really was saying is that we should filter dollars through a few expensive layers of government prior to reaching the corporate pockets.

re 27 It has been some time since I read that paper and I stated that wrong earlier. I believe they said that a dollar in tax increases resulted in a three dollar decline in the GDP.
However I would suggest that people take a look at the impact of the Kennedy tax cuts which as I recall created quite a growth in the economy. One problem in all of this is that there are a lot of variables from the weather to what is happening worldwide. A tax cut combined with low interest rates at a particular time may have a nice effect of 5% growth. At another period depending on what else is going on it good result in spectacular inflation.

From the abstract at the American Economic Review
“The behavior of output following these more exogenous changes indicates that tax increases are highly contractionary. The effects are strongly significant, highly robust, and much larger than those obtained using broader measures of tax changes.” http://www.aeaweb.org/articles......100.3.763

Greg Mankiw writes in the New York Times “A recent study by Christina D. Romer and David H. Romer, then economists at the University of California, Berkeley, finds that a dollar of tax cuts raises the G.D.P. by about $3. According to the Romers, the multiplier for tax cuts is more than twice what Professor Ramey finds for spending increases.”http://www.nytimes.com/2009/01.....=permalink

1. Manikiw is clearly picking and choosing data to support his ideological biases. But that’s what Conservatives do, so it’s not a surprise.

2. The Kennedy tax cut was carried out at a time when the top marginal rate was around 90%! Of course it stimulated the economy. The problem is that it seems that all Conservatives can do is say since cutting taxes worked once, it will work again. The top marginal rates are so low now, that cutting them isn’t going to change much of anything. The higher taxes are, the more cutting taxes will stimulate the economy. Taxes are REALLY LOW by historical standards now (at least going back to the depression). This means cutting taxes for high earners will just enrich their savings accounts.

Friedman taught at a non profit school funded largely from Federal dollars.

The major competitor for the US is run by the Communist Party and claims to be using capitalist mechanisms to serve the State.

The greatest sources of wealth in the US have all been the result of government investments: The Louisiana Purchase, the railroads, radio and TV, GPS, the internet, and biotech.

Friedman’s ideas make sense only in a true free market. The largest part of the American economy, health care, is not a free market.

Friedman’s ideas assume that corporate dollars are invested to benefit the shareholder’s ability to increase his or her capital. American corporations are rarely run with that objective since executives turn over in less than 5 years.

Friedman (and his protege) never foresaw the risks of derivatives and other forms of leverage that treat leverage as an end itself rather than creating the capital needed to increase productivity (and make jobs).

Nothing in Friedman differentiates between what is good for working Americans vs Chinese workers.

I would suggest that people take a look at the impact of the Kennedy tax cuts

Static analysis. Totally different world then. Tax cuts back then went mostly into the American economy. Now they would go into cheap labor and emerging economies.

American companies believe it or not are making great profits. Because they raise cheap capital on Wall Street, build factories where the cheap labor is and sell their products into the emerging economies.

Friedman sought to demonstrate that the money supply was the determinant factor in economics (and thus advocated that the government should have no hand in its manipulation) and this is contradicted by his consumerist theory of rational expectations as related to perceived permanent income.
In short, Friedman’s solution for deflation would be, as he jocularly proposed on many an occasion, to drop money from helicopters onto the cities.
………….=:)

“Let me be exactly clear about what health care reform means to you,” the president told residents of the Garden State. “First of all, if you’ve got health insurance, you like your doctors, you like your plan, you can keep your doctor, you can keep your plan. Nobody is talking about taking that away from you.”

While many U.S. companies initially hoped they could preserve much of their existing group health plans under the new grandfather provision, a new survey by Hewitt Associates, a global human resources consulting and outsourcing company, shows that almost all now believe they will not. Ninety percent of companies said they anticipate losing grandfathered status by 2014, with the majority expecting to do so in the next two years.

Under the “grandfather” provision of the U.S. Patient Protection and Affordable Care Act, companies can maintain many of their current health care coverage provisions and are required to make fewer changes to plan documents and administrative procedures in order to comply with the new law. Companies can lose their grandfather status if they take certain steps such as reducing benefits, significantly raising co-payment charges, significantly raising deductibles or changing insurance carriers.

@39: It depends on who is getting the tax cuts. A tax cut for Bill Gates does little if anything to goose GNP. A cut in FICA taxes would have a wide spending effect–since that is the biggest federal tax a huge proportion of low and middle income wage earners pay.

Since the feds create dollars, federal spending is not necessarily constrained by tax cuts. This is as opposed to cutting state and local taxes where these cuts are offset by lower spending.

Okay, let’s talk about the economy: About whom is this quote referring (name and date redacted)

…his economic program: a record cut in taxes, massive increases in the defense budget and steep reductions in welfare and other domestic programs.[Blank] hoped the tax cuts — dubbed by critics as “trickle down economics” that would help the rich — would quickly stimulate the economy, but the nation plunged into a deep recession. Millions were unemployed — the most since the Great Depression — and the budget deficit swelled. In [date], in a bid to trim the deficit, Congress approved the largest tax increase in history, partially reversing the cuts of the prior year.

“In [date], in a bid to trim the deficit, Congress approved the largest tax increase in history, partially reversing the cuts of the prior year.”

Quite the mystery. Obviously what happened next, according to Supply Side theory and our anti-tax priests, is that the economy slid in to depression because taxes were increased. Right?

I remember when the Clinton administration and the Congress without a single Republican vote raised taxes in 1993 and the result was an economic disaster of galactic proportions.
Fortunately Bush was elected in 2000 and he and the Republican congress got tax cuts that (as predicted) magically led to the enormous prosperity for all we have now and put us on a path for a balanced budget in 2012.

Lost, you would like to get rid of Special Supplemental Nutrition Program for Women, Infants and Children (WIC)?
What is the financial consequences of that?
America’s federal taxes would down $7.777 billion
The federal budget is approx $3.55 trillion.
Everyone’s federal taxes would be reduced by 0.22%
If Lost got a $1000 back on his tax return, now Lost gets a whopping two dollars and twenty cents more.

Now, What is the social consequences of that?
Now Lost gets to walk by starving women and kids, begging the food, while Lost can go out and get 2 more dollar hamburgers at McDs.
There will be an increase in crime, of prostitution and drug dealing as poor uneducated women try to find ways to feed their kids.
Heath care costs will go up as more malnourished, sick kids go to the emergency room.
Maybe parents will simply abandon their kids, so we get to pay more in orphanage costs.
Malnourished, sick kids doen’t study as well, so now there is another generation of people, who are poor and uneducated.

But Lost got his two dollars!

Still, that probably won’t effect Lost. Lost probably don’t live in the poorer parts of the country. Lost don’t have to see the hungry people in Kentucky, Mississippi, Texas, Alabama, Arkansas, South Dakota,West Virginia, Louisiana, Georgia, Missouri, Oklahoma, or Tennessee, the states with the poorest counties in the country.

Lost has said he doesn’t think altruism is a good model to base a society on, but he seems to have gone so far the other way, where there is NO altruism in his perfect government.

Another example of the selfish cruel Darwinian world the “Me” society wants to create.

Call me crazy, but if someone wants to have 3 kids they can’t afford, I’m unsure why I’m on the hook for the medical care, food and housing for that family. Can’t afford to feed a family? Don’t have one. If you do have one, feed it without asking me to contribute.

Call me a fascist (and you crazy morons will), but I have this odd belief that the proceeds of my labor belong to me. They don’t belong to Obama or Reid or Pelosi. They belong to me. I’m fine with contributing an exactly equal share to any other citizen for basic government functions licensed by the Constitution. Otherwise if you want my money you will take it by force of arms, as we do with the IRS. For the sole reason that I don’t enjoy prison I pay the iniquitous taxes liberals have saddled the productive members of society with. Were it at all practicable IRS agents, and frankly any other government wastrel, would be met with shotguns on my property.

This is not a government ‘of the people, by the people and for the people.’ That government has perished from the earth. Now it’s a government of pointless beauracrats, by liberal scoundrels, and for worthless beggars.

You folks are parasites. You aren’t what the founders imagined as the far off progeny of their magnificent ideas. You are the debris of a once great nation.

“You folks are parasites. You aren’t what the founders imagined as the far off progeny of their magnificent ideas. You are the debris of a once great nation.”

For my part, you’re disliked not so much for being a dumbfuck fascist as you are for being a pathetic whiner. But I’ve gotta say, you really outdid yourself with this latest whine. Does Lost need a hanky?

Buck up, Lost. Try being a man for once in your damned miserable life.

As opposed to the equally odd belief that these fruits are indeed the result of your interaction with many others who contribute their labor, and without them and their communal support (yes, even the little provided by the ‘parasites’) of your efforts, you would be picking fruits and berries and spending a great deal of your time looking for firewood.

So what’s your point? We pay for labor based on supply and demand in this country. It works. An architect makes more money hourly than I, and should. He or she invested more in acquiring their skills, and is paid more accordingly. A ditch digger makes less, and should. He or she chose the easy path requiring little from them, and is paid according to that criterion.

I went to school, provided by tax dollars. I drive to work on roads paved at taxpayer expense, and patrolled for public safety at taxpayer expense. The food I eat meets safety standards at taxpayer expense.

But every single American benefits from all this equally. We all start on the same field. If some wish to warm benches rather than play the game, that’s their choice. But it engenders in me NO sense of obligation to them.

Born poor? That sucks. But it doesn’t define a person unless they choose to let it do so. Opportunity exists for anyone with the desire to pursue it, rich or poor. If a person chooses to let their circumstances guide them, rather than guiding their circumstances I don’t owe them anything on the basis of that choice.

Had 4 kids and you make $25,000 a year. What the hell is wrong with this person? Who do they think will pay for the clothes, housing, food and medical care for these children? Oh, yeah, that would be me. They didn’t consult me on their marriage (or lack thereof) but somehow I’m responsible for their progeny?

Honestly, no sane person can see this as a way to run a society. It’s social engineering for generations of incompetence, thriftlessness and reliance. All qualities corrosive to a robust culture.

“You folks are parasites. You aren’t what the founders imagined as the far off progeny of their magnificent ideas. You are the debris of a once great nation.”

Parasites? What a fucking hate-filled loon. Many people here at HA have studied harder than you, work harder than you, and are far more successful than you. Some people here have started out at the very bottom of the economic ladder and by studying and working harder than you, have passed you by. If we’re “the debris of a once great nation”, then what the fuck does that make you?

I don’t think Stefan Sharkansky is any more a Libertarian than Goldy is. There are two Libertarians I can think of now, and they’re both on Fox Business Channel: Judge Andrew Napolitano and John Stossel (formerly of ABC’s 20/20 program). If you get FBN, you should give them a listen to get a better idea of what the Libertarians stand for.

@78 Losty sez: “He or she invested more in acquiring their skills, and is paid more accordingly.”

This claim stands in direct opposition to your claim that labor is paid “based on supply and demand”. You are, in fact, undertaking a similar analysis akin to Karl Marx and his labor theory of value. So, that makes you a communist?

Look, if there were only one ditch digger in the world, they would command a pretty high price. That is supply and demand.

Similarly, if we restrict entry into medical schools, the income doctors receive is not necessarily tied to “their effort”. Further, unlike auto workers, doctors do not compete against foreign doctors. This holds for many well paid professions that require advanced degrees.

Studies also show that social mobility in this country is more restricted than in many other industrialized countries. Where you start in life is fairly influential on where you wind up on the economic ladder.

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